A constant challenge of my job is the “dealing with contingencies” issue.  Whenever I discuss an estate or asset protection plan with a client, I have to probe into various circumstances, which, no matter how remote, may occur and therefore should be dealt with in their legal documents.

“So, upon the demise of the survivor of you, Joe, and your wife Abbey, who inherits your estate?” I’ll ask.

“We want our three children to split the estate equally” is a common reply.

“That’s a good start,” I’ll encourage, and prod on, “but what happens if one of your children predeceases you?”  A tough question for most people.  No one wants to contemplate this troubling situation.

Do you leave it to the children of your children?  Quite possibly.  What about the spouse of your child?  After all, your child may have been in a very long-term marriage at that point.  But if you leave all of the amounts to the spouse, and that spouse remarries, it is possible that the inheritance you once intended for your child ends up with people you don’t even know.

On the other hand, what if the spouse of your deceased child would need the assistance an inheritance may bring.  Your child, for example, may be the chief “bread winner” in his or her family.  If something tragic were to occur to your child, it could be entirely possible that if you left that child’s share for his or her children, that the grandchildren could have everything they need while their mother/father (the spouse of your child) lives in abject poverty.

Many solutions to this potential dilemma exist, but those solutions need to be discussed during the earliest stages of your planning.   Testamentary trusts may be “imbedded” into your legal documents that “sprinkle” the income and principal of the share for those who need it the most.  Contingencies, such as a spouse remarrying, could be drafted to result in the loss of benefits of that trust, so that the assets of your estate are “kept in the family”.

Who serves as the trustee in these situations is also important.  You may not want one of your other children to be put in an uncomfortable position of having to determine whether their brother-in-law or sister-in-law is in greater need of the income than their nieces or nephews.  Better options exist.

Despite the apparent distasteful thoughts associated with these issues, I encourage you to consider all possible contingencies within your family’s plan. It is far easier to review the options with your estate-planning attorney now, rather than have unintended results occur later.

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